Joseph Schumpeter Meets Ferdinand Porsche

2017 has been a blockbuster year of groundbreaking news within the automotive industry. Specifically, new developments in autonomous technologies and electric propulsion have radically changed the automotive landscape. It’s becoming clear that the pace of change is up-shifting far faster than most industry analysts and experts initially modeled. From Intel buying Mobileye to Volvo announcing a near-term commitment to electric vehicles, there has been no shortage of headlines. Mercedes announced it will electrify all models by 2022 and GM has made a $500 million investment in ride-hailing service Lyft. Based on these events (and many others) we need no further evidence that the automotive industry is staring Creative Destruction in the face. Today’s announcement from Porsche only reiterates the pace of change that is upending the industry. Bloomberg reported today that Porsche is going to launch “Porsche Passport,” an app-based subscription service that enables members flexible ownership of Porsche vehicles.

Drivers to Summon Porsches With New $2,000-a-Month Subscriptions

REPRINTED FROM BLOOMBERG OCTOBER 10th 2017: BY GABRIELLE COPPOLA

Porsche will begin an app-based subscription service next month, joining the ranks of automakers experimenting with more flexible ownership models as ride-hailing and smartphones upend traditional auto retailing.

The length of the pilot, called Porsche Passport, is open-ended and initially will be limited to just 50 people in Atlanta, according to Klaus Zellmer, president of North America for the Volkswagen AG unit.

The first subscription tier starts at $2,000 a month and allows users to summon a 718 Boxster, Cayman S, Macan S or Cayenne on demand. For $3,000 a month, drivers get access to 22 different Porsche models. Registration, insurance, and maintenance costs are covered, though subscribers still have to pick up the tab for fuel. They can swap for as many different models as desired during the month.

Porsche is looking for a way to reach younger consumers whose shopping and transportation habits have been shaped by Silicon Valley giants like Uber Technologies Inc. and Airbnb Inc. It’s following in the footsteps of General Motors Co.’s Cadillac, which launched its Book subscription service in January, and Care by Volvo, which combines lease, insurance, and maintenance into one monthly payment.

“We now have millennials who are incredibly successful and have the financial power to own a Porsche, but might not be willing to own a Porsche today,” Zellmer said in a phone interview. “We are pretty sure it will help sales, especially in the mid and long-term.”

Porsche is partnering with Atlanta-based startup Clutch Technologies LLC, which sells analytics software that can predict which models will be in demand based on past customer behavior, weather conditions, and other factors. The brand’s two Atlanta-area dealerships will provide service and maintenance for the fleet of cars used through the service, he said.

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About Philip Richter

Philip Richter is President and co-founder of New-York-City-based Hollow Brook Wealth Management, LLC. The Turtle Garage Blog, he says, is dedicated to his "love of excessive personal transportation."